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The Food Industry

  • ID: 41588
  • November 2003
  • Region: United Kingdom
  • Key Note Ltd
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This report reviews key trends and developments in the UK retail food market between 1998 and 2002, and provides forecasts for the period 2003 to 2007. This includes a Pest Analysis, outling the Political, Economic, Social and Technological factors which impact the industry. The competitive strucute of the market is looked at and the industry is analysed under the following market segments:

-Meat and Meat Products
-Fish and Fish Products
-Fruit and Vegetables
-Dairy Products, Eggs, Oils and Fats
-Bread, Cakes, Biscuits and Cereals
-Miscellaneous Foods

Both fresh and processed products are included, but confectionery, ice cream, alcoholic drinks, and hot and cold beverages (including fruit juices, tea and coffee) are excluded.

Strengths, Weaknesses, Opportunities and Threats for the food industry are provided as well as a Global perspective and forecasts for the Future of the UK Food Industry.

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Executive Summary <BR><BR>1. Market Overview <BR><BR>REPORT COVERAGE <BR><BR>MARKET SIZE <BR>Consumer Expenditure at Current Prices <BR>Table 1.1: Consumer Expenditure on Food at Current Prices (£m at rsp), 1998-2002 <BR>Consumer Expenditure at Constant 1995 Prices <BR>Table 1.2: Consumer Expenditure on Food at Constant 1995 Prices (£m at rsp), 1998-2002 <BR>Retail Prices <BR>Table 1.3: Retail Price Index for Food and All Items (January 1987=100), March 1999-March 2003 <BR>Overseas Trade <BR>Table 1.4: UK Overseas Trade in Food and Live Animals† (£m), 1998-2002 <BR><BR>MARKET SEGMENTATION <BR>Consumer Expenditure at Current Prices by Sector <BR>Table 1.5: Consumer Expenditure on Food by Sector at Current Prices (£m at rsp), 19982002 <BR>Table 1.6: Consumer Expenditure on Food by Sector (%), 19982002 <BR>Consumer Expenditure at Constant 1995 Prices by Sector <BR>Table 1.7: Consumer Expenditure on Food by Sector at Constant 1995 Prices (£m at rsp), 1998-2002 <BR>Organic Foods <BR>Table 1.8: Consumer Expenditure on Organic Foods at Current Prices (£m at rsp), 1997/19982001/2002 <BR><BR>INDUSTRY STRUCTURE <BR>Number of Companies <BR>Food Manufacturing <BR>Table 1.9: Number of UK VAT Based Enterprises in the Food Manufacturing Industry, 19992003 <BR>By Turnover <BR>Table 1.10: Number of UK VAT Based Enterprises in the Food Manufacturing Industry by Turnover (number and %), 2003 <BR>Employment <BR>Table 1.11: Employment in the UK Agriculture, Fishing and Food Manufacturing Sectors (000), March 2002March 2003 <BR>Retail Distribution <BR>'Predominantly Food Stores' <BR>Table 1.12: Sales Through 'Predominantly Food Stores' by Value at Current Prices (£m at rsp and index 1995=100), 19982002 <BR>Large Stores, Small Stores and Specialist Stores <BR>Table 1.13: Sales Through `Predominantly Food Stores' by Type at Current Prices (index 1995=100), 19992003 <BR>Table 1.14: Sales Through Specialist Food Stores by Type at Current Prices (index 1995=100), 19992003 <BR><BR>MARKET POSITION <BR>Share of Total Household Expenditure <BR>Table 1.15: Total Household Expenditure and the Share Taken by Expenditure on Food at Current Prices (£m at rsp and %), 19982002 <BR><BR>KEY TRENDS <BR>Meat and Meat Products <BR>Fish and Fish Products <BR>Fruit and Vegetables <BR>Dairy Products, Eggs, Oils and Fats <BR>Bread, Cakes, Biscuits and Cereals <BR>Miscellaneous Foods <BR><BR>ADVERTISING AND PROMOTION <BR>Table 1.16: Main Media Advertising Expenditure on Food by Major Product Sector (£000), Years Ending March 2002 and 2003 <BR><BR>BUYING BEHAVIOUR <BR>Trends in Consumption <BR>Table 1.17: Per Capita Consumption of Selected Foods (grams per person per week), 1996/1997, 2000/2001 and 2001/2002 <BR>Consumer Penetration <BR><BR>LEGISLATION <BR><BR>KEY TRADE ASSOCIATION <BR>Food and Drink Federation <BR><BR><BR>2. PEST Analysis <BR><BR>POLITICAL FACTORS <BR>Sustainable Development <BR>Genetically Modified Foods <BR>Food Assurance Schemes <BR>FootandMouth Disease <BR>Organic Farming Scheme <BR><BR>ECONOMIC FACTORS <BR>Economic Downturn <BR>Inflation <BR>Trade Deficits <BR><BR>SOCIAL FACTORS <BR>Convenience <BR>Healthy Eating <BR>Snacking <BR>Fresh Food <BR>Demographic Trends <BR>Household Trends <BR><BR>TECHNOLOGICAL FACTORS <BR>Organic Food <BR>Supermarket Suppliers <BR>Food Shortages <BR>The Internet <BR><BR><BR>3. Key Note Primary Research <BR><BR>INTRODUCTION <BR>Table 3.1: Food Eaten During a Typical Day (% of adults), 2002 and 2003 <BR><BR>COOKED BREAKFASTS <BR>Table 3.2: Penetration of Cooked Breakfasts During a Typical Day (% of adults), 2002 and 2003 <BR><BR>NONCOOKED BREAKFASTS <BR>Table 3.3: Penetration of NonCooked Breakfasts During a Typical Day (% of adults), 2002 and 2003 <BR>HOT LUNCHES <BR>Table 3.4: Penetration of Hot Lunches During a Typical Day (% of adults), 2002 and 2003 <BR><BR>PREPARED LUNCHES <BR>Table 3.5: Penetration of Prepared Lunches During a Typical Day (% of adults), 2002 and 2003 <BR><BR>SAVOURY SNACKS <BR>Table 3.6: Penetration of Savoury Snacks During a Typical Day (% of adults), 2002 and 2003 <BR><BR>SWEET SNACKS <BR>Table 3.7: Penetration of Sweet Snacks During a Typical Day (% of adults), 2002 and 2003 <BR><BR>FRESH FRUIT <BR>Table 3.8: Penetration of Fresh Fruit During a Typical Day (% of adults), 2002 and 2003 <BR><BR>TAKEAWAY FOOD <BR>Table 3.9: Penetration of Takeaway Food During a Typical Day (% of adults), 2002 and 2003 <BR><BR>READY MEALS <BR>Table 3.10: Penetration of Ready Meals During a Typical Day (% of adults), 2002 and 2003 <BR><BR>ORGANIC/HEALTH FOODS <BR>Table 3.11: Penetration of Organic/Health Foods During a Typical Day (% of adults), 2002 and 2003 <BR><BR>VEGETARIAN FOOD <BR>Table 3.12: Penetration of Vegetarian Food During a Typical Day (% of adults), 2002 and 2003 <BR><BR>EATING ALONE IN THE EVENING <BR>Table 3.13: Adults Who Eat an Evening Meal on Their Own During a Typical Day (% of adults), 2002 and 2003 <BR><BR>EATING AN EVENING MEAL WITH OTHERS <BR>Table 3.14: Adults Who Eat an Evening Meal with Others During a Typical Day (% of adults), 2002 and 2003 <BR><BR><BR>4. Competitive Structure <BR><BR>INTRODUCTION <BR><BR>MARKET LEADERS <BR>Table 4.1: Top Ten UK Food Manufacturers by Turnover and PreTax Profit (£m), 2001/2002 <BR><BR>Associated British Foods PLC <BR>Company Structure <BR>Financial Results <BR>Table 4.2: Associated British Foods PLC — Financial Performance (£m and %), 2000-2002 <BR><BR>Tate & Lyle PLC <BR>Company Structure <BR>Financial Results <BR>Table 4.3: Tate & Lyle PLC — Financial Performance (£m and %), 2001-2003 <BR><BR>Nestlé Holdings (UK) PLC <BR>Company Structure <BR>Financial Results <BR>Table 4.4: Nestlé Holdings (UK) PLC — Financial Performance (£m and %), 2000-2002 <BR><BR>RHM Group One Ltd <BR>Company Structure <BR>Financial Results <BR>Table 4.5: RHM Group One Ltd — Financial Performance (£m and %), 2001-2003 <BR><BR>Northern Foods PLC <BR>Company Structure <BR>Financial Results <BR>Table 4.6: Northern Foods PLC — Financial Performance (£m and %), 2000-2002 <BR><BR>Uniq PLC <BR>Company Structure <BR>

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Consumer expenditure on the foods and food products covered by this Market Review totalled £47.47bn in 2002, representing an increase of 2.2% on 2001. With so many mature markets, year-on-year growth is fairly moderate in most markets, but strong performances were achieved in 2002 by the markets for fish and fish products; bread, cakes, biscuits and cereals; and ready meals, with sugar and pizza also showing above-average growth. <BR><BR>Contributing to growth in many sectors has been consumer switching to higher-priced products. This reflects demand for both quality and convenience, as well as growing interest in a broader range of foods, e.g from foreign cuisines. As part of the consolidation process, a number of food processors are switching from commodity products to added-value products to take advantage of this consumer trend. <BR><BR>In 2002, fruit and vegetables made up the largest market, followed by meat and meat products. However, the fastest-growing markets were fish and fish products, and bread, cakes biscuits and cereals.<BR><BR>Despite the recent problems faced by the meat and meat products market in recent years, it succeeded in achieving real value growth over the 1998 to 2002 review period. Much of this growth has been driven by ready meals and other meat products, which have gained share from carcass meats.<BR><BR>Although it is one of the smallest food markets, the fish and fish products market has benefited from recent health concerns surrounding meat, as well as the growing variety of fish that is now widely available. Premium products such as ready meals, canned fish and fish-based snacks have all performed particularly well in recent years.<BR><BR>In the fruit and vegetables market, it is fruit that has been driving growth, with fresh fruit, in particular, having benefited from concerns about healthy eating. However, falling prices in some of the vegetable sectors held back the total market's growth in 2002. <BR><BR>The maturity of the market for dairy products, eggs, oils and fats, and the commodity status of a number of products are reflected in its recent performance. Nevertheless, while some sectors are currently weak, growth in the stronger sectors, such as cheese, spreads and yoghurts, is helping to keep the market's value stable. <BR><BR>Consumer expenditure on bread, cakes, biscuits and cereals slowed in 2002; nevertheless, it still remained one of the fastest-growing food markets and, over the 1998 to 2002 period under review, outperformed all other food markets by value. The trends that have helped growth have been a greater focus on quality and new product developments that have resulted in a variety of new products and new brands. <BR><BR>In the miscellaneous foods category, ready meals make up one of the fastest-growing markets, although sales of pizzas and pasta remain strong. Nevertheless, all other markets showed some growth in 2002. <BR><BR>Consolidation in the food industry continued in 2002 and 2003, with further mergers and acquisitions. One traditional name in the UK food market — The Albert Fisher Group — finally succumbed to its increasing burden of debt and went into receivership in May 2002. 2002 also saw the sale of Premier Food's Crosse & Blackwell dried sauce and Snack Stop business for an undisclosed sum to Brand Partnership, the UK's leading supplier of savoury rice, pasta with sauce, soup and hot instant snacks. Greencore, the European food and ingredients manufacturer, disposed of non-core businesses in Hazlewood Foods as well as Erin Foods and William Rodgers (dried soups and sauces). <BR><BR>Other recent developments include Associated British Food's £171m purchase of Novartis AG's Food and Beverage division (comprising Ovaltine and its associated brands) in October 2002. In November 2002, Uniq completed the sale of its UK-based St Ivel spreads business to Dairy Crest Group for £86.5m. Uniq also sold its UK-based ambient sauces business — Uniqsauces — to McCormick (UK) for £12.2m.<BR><BR>Most companies (especially those operating in commodity sectors) continue to be committed to improving operational efficiency, and most companies have refocused on their core activities, which has led to the sale of non-core or underperforming businesses.<BR><BR>Major changes are also afoot in the grocery retailing sector, following Wm Morrison Supermarkets' all-stock offer to acquire the UK supermarket chain, Safeway. This sparked subsequent rival bids, but, in September 2003, the Competition Commission announced its approval of Morrison's bid, subject to certain conditions. <BR><BR>Key trends in the food market over the 5 years from 2003 to 2007 will include: greater participation in the convenience and ethnic foods sectors, and increased consumer interest in healthy eating (which is partly driven by the UK's ageing population profile). Year-on-year growth will remain modest in most markets, reflecting their maturity and already high levels of penetration. The markets forecast to achieve the highest growth are bread, cakes, biscuits and cereals, ready meals, pizzas and pasta. <BR>

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